The Report: Kuwait 2022
The economy of Kuwait has long been underpinned by the production and export of crude oil. Although the rise in energy prices in 2021-22 boosted government revenue and macroeconomic stability, the Covid-19 pandemic, which preceded the commodity price boom, underscored the risk of over-reliance on an industry subject to fluctuating global demand.
Country Profile
Kuwait has rebounded strongly from the disruption of the Covid-19 pandemic, and public finances have been bolstered by elevated oil prices in 2021-22. With one of the most dynamic political systems in the region, the hope is that the executive and legislative branches of Kuwait’s government can work together to advance the policy changes and strategies needed to fulfil the ambitions of the country’s long-term development plan, New Kuwait 2035. Recently, Kuwait has been pursuing a programme of economic diversification to jump-start expansion of the private sector via infrastructure projects and the privatisation of government assets. Among the many priorities of New Kuwait 2035 are goals to expand the role of the private sector, incentivise public-private partnerships, upgrade existing infrastructure, and generate a support mechanism for small and medium-sized enterprises. This chapter contains a viewpoint from Crown Prince Sheikh Mishal Al Ahmad Al Jaber Al Sabah.
Explore chapterEconomy
Kuwait’s economy has long been underpinned by the production and export of crude oil. Although the rise in oil prices in 2021-22 boosted government revenue and macroeconomic stability, the Covid-19 pandemic – which preceded the commodity price boom – also underscored the risks of overreliance on an industry subject to fluctuating global demand. This has created fresh impetus for economic diversification, with the government hoping that robust public finances, as well as a new Cabinet and elected legislature, will drive policy changes and infrastructure projects, in turn unlocking investment and private sector growth. Although many of the projects and objectives of the Kuwait National Development Plan 2015-20, which focused on infrastructure, have yet to be fulfilled, significant investment and ongoing efforts to meet these goals highlight progress.
Explore chapterTrade & Investment
Kuwait’s trade and investment profile has long been dominated by oil, with revenue from its vast reserves used to fund overseas investment, generating sustainable long-term returns and safeguarding future prosperity. As Kuwait emerges from the disruption of the Covid-19 pandemic with robust public finances and a new government in place following elections in September 2022, it has an opportunity to drive forwards projects that diversify exports and attract inward investment in high-potential industries. Kuwait has a long-established legal framework that governs public-private partnerships, which could potentially play a key role in the country’s broader efforts to widen the scope of private sector participation in the economy under the direction of New Kuwait 2035. This chapter contains an interview with Sheikh Meshaal Jaber Al Sabah, Director-General, Kuwait Direct Investment Promotion Authority.
Explore chapterBanking
An easing of disruptions associated with the Covid-19 pandemic, a sustained increase in oil and gas receipts, and the rollout of a new law providing a framework for establishing digital offerings have given Kuwait’s banking sector renewed confidence that has been supported by the country’s wider economic recovery. Indeed, with real GDP returning to growth in 2021 and expected by the IMF to reach as high as 8.7% in 2022, credit and profitability look set to see further expansion. The sector is notable for its high liquidity and strong capitalisation, both of which helped it navigate the uncertainties associated with the pandemic and other global headwinds. Government-led pandemic amelioration and recovery measures helped support depositors and banks, a trend reinforced by the stable rate of deposits from the retail sector and government-related entities observed during the second half of 2021. This chapter contains an interview with Basel Al Haroon, Governor, Central Bank of Kuwait, and a dialogue with Sheikh Ahmad Duaij Jaber Al Sabah, Chairman, Commercial Bank of Kuwait; and George Richani, CEO, Al Ahli Bank of Kuwait.
Explore chapterIslamic Financial Services
One of the world’s largest Islamic finance markets, Kuwait has a wide range of banking, sukuk (Islamic bonds) and takaful (Islamic insurance) entities and products on offer, with recent headwinds such as the Covid-19 pandemic proving little obstacle to the sharia-compliant sector’s continuing robust growth. Indeed, the country’s Islamic banks have been expanding faster than its conventional ones in recent years, with a new merger making an Islamic banking provider an even bigger player in the local market. At the same time, sukuk issuance continues to bolster the country’s capital markets, while takaful products compete for market share with well-established conventional players. Increasingly, Islamic financial technology is playing a role, with Kuwait home to many innovative fintech outfits benefitting from a central bank-supported drive towards digitalisation. This chapter contains an interview with Abdul Wahab Al Rushood, Acting Group CEO, Kuwait Finance House.
Explore chapterInsurance
One of the world’s largest Islamic finance markets, Kuwait has a wide range of banking, sukuk (Islamic bonds) and takaful (Islamic insurance) entities and products on offer, with recent headwinds such as the Covid-19 pandemic proving little obstacle to the sharia-compliant sector’s continuing robust growth. Indeed, the country’s Islamic banks have been expanding faster than its conventional ones in recent years, with a new merger making an Islamic banking provider an even bigger player in the local market. At the same time, sukuk issuance continues to bolster the country’s capital markets, while takaful products compete for market share with well-established conventional players. Increasingly, Islamic financial technology is playing a role, with Kuwait home to many innovative fintech outfits benefitting from a central bank-supported drive towards digitalisation. This chapter contains an interview with Abdul Wahab Al Rushood, Acting Group CEO, Kuwait Finance House.
Explore chapterCapital Markets
While many established global stock markets have seen mixed performance in recent years, Kuwait’s has shown positive gains, highlighting the robust nature of its capital markets. With an economy backed by rising oil prices and a solid, well-capitalised financial sector, the country continues to see international investor interest grow. Indeed, its benchmark indices recorded positive performances throughout 2021 and were among the best-performing markets in the Gulf region. A stronger regulatory framework has been created, while new products and financial technology developments have helped the country’s capital markets recover rapidly from the economic impact of the Covid-19 pandemic. Further regulatory reform, more listings and the expansion of a wider bond and sukuk (Islamic bonds) market are in the pipeline, as the financial sector looks to capitalise on Kuwait’s strong economic performance amid global uncertainties. This chapter contains an interview with Mohamed Al Osaimi, CEO, Boursa Kuwait.
Explore chapterEnergy & Utilities
Kuwait is largely reliant on oil for exports, government revenue and GDP contribution. The country is therefore particularly sensitive to fluctuating global hydrocarbons prices and the long-term financial risks associated with the global shift towards lower-carbon sources of energy. Transitioning towards a more diversified and sustainable energy mix is an ongoing challenge for the country, as for much of the region, in light of the industry’s long-standing history and key contributions to the economy. A raft of ongoing energy projects seek to promote progress towards Kuwait’s goal of enhanced in-country value addition, as well as economic diversification and resilience to turbulent hydrocarbons prices, while also aligning the country with the international sustainability agenda. Increasing non-associated gas production, heavy oil production and crude oil processing are particularly compelling opportunities to meet Kuwait’s energy needs and align the country’s development with long-term goals.
This chapter contains an interview with Sheikh Nawaf Al Sabah, CEO, Kuwait Petroleum Corporation.
Transport & Logistics
Under its overarching economic development plan, New Kuwait 2035, the government is working to strategically harness the country’s location on the Gulf to transform its transport and logistics industries into key contributors to GDP. Several significant upgrades to existing transport infrastructure are at an advanced stage, while a new logistics belt is a key component of the Madinat Al Hareer, or Silk City, development – New Kuwait 2035’s flagship project. However, progress on a raft of other proposed developments that could, if completed, unlock latent economic potential for the country has stalled in recent years due to both internal and external factors, including political disagreements, complex business procedures and fluctuating international oil prices. Within the context of the Covid-19 pandemic, the importance of strong infrastructure and logistics became more evident than ever. It brought a renewed determination from Kuwait’s authorities to modernise transport infrastructure to the level required to fully realise its economic diversification plans, and facilitate the movement of people and goods within and across borders.
This chapter contains an interview with Maen Mahmoud Razouqi, CEO, Kuwait Airways.
Construction & Real Estate
Kuwait’s construction and real estate sectors rebounded in the years preceding the Covid-19 pandemic, following the 2017 unveiling of New Kuwait 2035, the government’s overarching development blueprint, which heralded an extensive infrastructure pipeline. This sparked growth in construction activity, and saw a host of new residential and commercial properties enter the market. In spite of that reinvigoration, both the country’s traditional reliance on oil revenue and the fact that the government has routinely favoured public financing over private for major infrastructure developments has contributed to delays on construction projects in recent years. However, the easing of pandemic-related disruptions and a spike in global oil prices have allowed the government to once again channel funding into housing, energy, utilities, industry and health care infrastructure projects. This chapter contains an interview with Mazen Hawwa, Vice-Chairman and Group CEO, United Real Estate Company.
Explore chapterIndustry
Kuwait’s economy relies heavily on hydrocarbons-related industries, and while plans are in place to transition to more renewable sources, medium-term development strategies will see oil and gas extraction, processing and capacities ramped up, with the revenue channelled into the government’s industrial diversification drive. Downstream chemicals and petrochemicals production forms the backbone of Kuwait’s non-oil industrial output, and major capacity-expansion projects are planned. The years leading up to the Covid-19 pandemic brought significant growth for the manufacturing sector, with the government announcing its decision to make more land available for industrial activities to increase sector momentum and cater to growing demand. The government’s portfolio of proposed mega-projects is designed to invigorate cross-sector growth, with a strong focus on manufacturing and logistics, including the implementation of a number of dedicated industrial and economic zones. This chapter contains an interview with Mohammed E Al Adwani, Director-General, Public Authority for Industry.
Explore chapterICT
Technology development is central to Kuwait’s long-term plans to diversify the economy, with the government attempting to position the country as a regional leader in ICT and financial services. The competition in those spaces across the GCC is fierce, and countries such as the UAE and Saudi Arabia are making concerted investment in ICT infrastructure and financial technology. The highly competitive local telecommunications market is proving beneficial to Kuwait’s plans, as is the country’s active and engaged consumer market, particularly in the mobile sector. Consolidation has been a trend in recent years as major tech players move to strengthen their market positions and diversify their services.
This chapter contains an interview Maziad Alharbi, CEO, stc Kuwait.
Education & Health
With one of the largest relative youth cohorts in the Gulf – the share of the population under 35 stood at 50% as of 2022 – Kuwait has a vested interest in achieving positive learning and health outcomes for nationals and foreign residents alike. As was the case around the world, the Covid-19 pandemic posed specific and immediate challenges for educators and medical workers in the country, which the government is working to address in parallel with ongoing efforts to achieve the development targets set by New Kuwait 2035, the long-term development roadmap launched in 2017. The so-called education gap experienced after many young students were forced to adjust to online learning virtually overnight is a particular concern for policymakers, and a mix of in-person and online solutions are being explored to help learners catch up.
This chapter contains an interview with Thamer Arab, CEO, Dhaman.
Legal Framework
While it is common knowledge that laws in the Middle East include restrictions on foreign parties doing business that do not apply to citizens, progress has been made in recent years to facilitate foreign investment and participation in businesses in the region. Kuwait was a pioneer in this regard, with the promulgation of the Foreign Direct Investment Law in 2014, which has since been replicated in one form or another by several other countries. Despite these steps, there continue to be restrictions on the participation of international investors and owners in Kuwaiti companies. The government has worked in recent years to address this, both procedurally and substantively.
This chapter contains an interview with Ezekiel Tuma, Partner, ASAR – Al Ruwayeh & Partners.
The Guide
The Guide contains listings of accommodation options throughout Kuwait for both business and leisure travellers. Useful information is provided on the latest visa requirements and business etiquette, as well as tips and advice for new and returning visitors.
Explore chapterTable of Contents
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Crown Prince Sheikh Mishal Al Ahmad Al Jaber Al Sabah
Sheikh Meshaal Jaber Al Sabah, Director-General, Kuwait Direct Investment Promotion Authority (KDIPA)
Basel Al Haroon, Governor, Central Bank of Kuwait
Mohammad Al Osaimi, CEO, Boursa Kuwait
Sheikh Nawaf Al Sabah, CEO, Kuwait Petroleum Corporation (KPC)
Maen Mahmoud Razouqi, CEO, Kuwait Airways
Kuwait Times: Oxford Business Group launches publication on country’s economy
Arab Times: Photo Release
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Arab Times: Steps being taken to expand the domestic ‘energy sector’
